Lung alveoli are formed through the division of saccules by septae comprises of mesenchymal and epithelial cells. It has been reported that all-trans retinoic acid (RA) increases the number of alveoli in newborns and in emphysematous adult rats. RA binds to three retinoic acid receptors (RAR, i.e., RAR-alpha, -beta and -gamma. In preliminary studies, we found decreased numbers of alveoli and surface area in RAR- beta gene-deleted mice. The formation of alveolar septae in the developing lung is regulated by platelet derived growth factor-A (PDGF- A), produced by the distal lung epithelium, that binds to PDGF-receptor- alpha (PDGF-Ralpha) expressed in lung mesenchymal cells. Therefore, we hypothesize that RA binds to RAR-beta in lung epithelial cells and this inhibits alveolarization, perhaps by down-regulating PDGF-A expression. We further hypothesize that RA binds to RAR-gamma in lung mesenchymal cells and promotes alveolarization by increasing the expression of PDGF- Ralpha. To address these hypotheses, we propose to accomplish the following specific aims. 1. We will perform morphometric analyses in lungs obtained from wild-type and RAR-beta and RAR-gamma gene-deleted mice at different stages of development to elucidate the role of these receptors in alveolarization; 2. We will investigate the effects of RAR gene deletions on the expression of PDGF-A as well as on the proliferation and differentiation of alveolar epithelial cells; 3. We will assess the expression of PDGF-Ralpha as well as the proliferation and differentiation of alveolar myofibroblasts, a key cell type involved in alveolar septal from wild-type and RAR gene-deleted mice, to characterize the direct effects of RA, as well as RAR specific agonists and antagonists, on markers of alveolar differentiation. We will subsequently treat newborn mice in both, both wild type and RAR gene- deleted, with the active retinoids identified in vitro studies. By performing these studies, we will test the hypothesis that alveolar formation is regulated by RA signaling through specific receptors influenced by this signaling. Accomplishing these aims will enhance understanding of how RA/RAR signaling promotes the epithelial- mesenchymal interactions involved in alveolar formation. This knowledge will form the foundation for the rational development of agents that promote alveolar growth and repair in humans.